Petroleum Contract Compliance and Inspection

6. Key considerations for policy makers

Good practice in monitoring and inspection of oil and gas activity involves the continued and dynamic development and implementation of an overall sector policy framework. An important part of that framework should concern how to address social and environmental impacts, health and safety, and the interests of all stakeholders, including employees and contractors. Protection of vulnerable groups including children should also play a role in the overall policy framework.

A well designed environmental and social protection regime will include the following instruments to be submitted for approval of the environmental authority in the host government:

Source: Adapted from Oil, Gas, and Mining: A Sourcebook for Understanding the Extractive Industries, the World Bank (2017)

To ensure that environmental impact assessments of the oil and gas sector are properly managed, the scope of inspections may be extended to cover associated water storage, product, fuel and materials transport, handing and storage facilities, and processing plants and infrastructure associated with the operation including roads, and railway routes, waterways, and ports along which hazardous materials may be transported and locations where they are stored.

Governments should make every effort to see that the sector agencies responsible for petroleum contract compliance inspections have sufficient staff with adequate knowledge and experience of all the key sectors of the economy, adequate budgets for both wages and other costs (such as computers, data, and record-keeping systems, as well as vehicles and costs of operational travel) in order to be able to hire and retain competent staff, provide training, and to have a strong presence on the ground, including at mine sites. Very close collaboration between the environmental authority and the technical staff at the oil and gas sector ministry should be maintained in reviewing and approving instruments submitted by the investor for permits and inspections.

Social and gender issues should mandate inspections of investors’ social and environmental obligations under the contract and legislation. Where there is a social ministry or a women’s ministry, those ministries should be consulted in social mitigation measures and local development initiatives for the oil and gas sector project and in carrying out inspections.